Understanding the Tech Crash [Finance Fridays]

With massive layoffs, hiring freezes, and stock price crashes, this seems like a scary time

May 14, 2022

This is an SOS,

Tech is coming to an end. Turns out Software Engineering is no longer a good field. Tech stocks are crashing, big companies stopped hiring, and “safe” FAANG companies have done mass layoffs. I should’ve listened to my parents and not spent all that time “playing” on the computer. Time to shut down this newsletter, find a new field, and hope it doesn’t crash.

Headlines like this can seem scary, but most people don’t need the basics of finance.

Seems like every third expert is hopping on this bandwagon huh? I’ve had a few people reach out wrt these scary developments. They read the headlines, saw people posting about layoffs, and saw their stock portfolios plummet. But there is more to the situation.

In this post, I will give you an overview of the situation and why the headlines can be misleading. I will then cover what you should do to get ahead in this situation so that you can walk out the winner. To prove that what I’m about to show you actually works, look at the following email I received just today. Even with the hiring freezes, and tech slow down, people are still reaching out with lucrative positions and offers.

The key is to develop your profile and skills, till you become recession-proof.

The highlights

Since y’all are busy people, I am about to tweak the format a bit. I will now add a section at the beginning that will summarize the key points. That way you can decide if you want to read on.

When companies like Meta lose 230 Billion Dollars, this isn’t cash flow they are losing. The underlying business and cash flow are generally not affected by the stock price fluctuations.
The hiring freezes are normal. Every business, industry, and economy goes through the boom-bust cycle.
Even as some companies slow down, others will keep growing. For example, while Meta has slowed down, Amazon is accelerating hiring. There are a few steps you can take to make it in these times.
How you can set yourself up so that you thrive, even in recessions.

Sound good? Let’s get into it.

Part 1: When a Billion is not a Billion

When the news reports talk about a Billionaire or a Company making/losing 10 Billion Dollars in a day, it can seem absurd. How is it possible to earn/lose that much money, this quickly?

The key to this is understanding that this is not money in their bank accounts. This is the value of their stocks/assets. When we say a company lost 100 Billion USD of value, all that means is that the compani’s stock dropped by a certain amount. Since these are publicly traded companies, they tend to have a lot of shares.

Let’s get back to Meta’s example. Mark Zuckerberg has 400 Million Shares of Meta. Sounds like a lot, but that is still only 17% of the company.

Thus we know that Meta has roughly 2 Billion Shares. If the value of a share drops by 20 USD, that means Meta has lost 40 Billion in value. The important thing is that Meta’s profitability and underlying business are not affected. The same goes for many of the other tech giants. Their shares are dropping, but the businesses are still fine. Some of you reached out, worried about what these headlines meant for your prospects at these companies. Believe me, you’re fine.

Part 2: Boom and Bust Cycles

This is the second thing concerning a lot of people. We have seen the stories of the massive layoffs, with many companies retracting offers they had made for promising candidates. Entire divisions are being laid off, with many big companies instituting hiring freezes.

person holding black android smartphone — Both bull and bear markets are part of our economy. Photo by Javier Esteban on Unsplash

I can talk about macroeconomics, but on a human level, this is a tragedy. The way we have designed the economic system, our economy goes through cycles of growth and recessions. For the last decade, we have seen extreme growth. The economy was actually slowing down around 2019/2020 but then the Pandemic happened. This resulted in large-scale government stimulus, which lead to the markets staying afloat. These extreme stock market crashes and massive layoffs are a consequence of that. Keep in mind that there was a lot of money flowing into Tech Companies, a lot of which was flowing into terrible companies/investments. Many of the company shutdowns we are seeing is a result of those bad companies no longer being propped by VC money. This is not uniquely terrible. The economy has been through this and will continue to go through this.

Part 3: Riding this downturn

Despite the media telling you that the end of the world is here, there are tons of people hiring. I showed you an example earlier. I’ll show you another one.

If you follow my IG/Twitter, you will see how many recruiters reach out to me with opportunities. If you are looking for positions in tech, connect with me and I can forward jobs/recruiter contacts to you. Even in this slowdown, there are lots of jobs.

Meanwhile, there is one major step you need to take to make sure you are prepared with an updated profile. These are uncertain times, and there’s always a chance that you will lose your job through no fault of your own. Being ready to find new work if needed is a must. This is true even for people currently unemployed.

Follow the steps I lay out in this newsletter, and you will thrive. Do the work and trust the process

Having a well-developed LinkedIn profile is a must. Getting referrals is hard, and online applications are absurdly competitive. Instead of getting lost in the crowd, you can stand out and make people reach out to you. I have covered all the important steps in creating a LinkedIn profile that attracts recruiters and employers, right here. Don’t miss out on it, because it is the single most important thing you can do for your career.

Part 4: Setting yourself up for growth

LinkedIn is great for getting you opportunities in the short term. But what about your long-term career growth? This isn’t going to come as a shock to regular readers, but your long-term growth will come from your mastery of a craft/domain. Remember, you are the greatest investment you will ever make. Put your hands up, tuck your chin in, and continue to evolve. And your career advancement is guaranteed.

There are two kinds of people. People who don’t venture out and try to learn, fail and grow. Maybe they are content with where they are. Maybe they are scared to move. Either way, they stay where they are. Unfortunately in a rapidly evolving industry like Tech, that is a death sentence.

I’m guessing you’re like me. You appreciate that there are no shortcuts and that your growth requires dedication. You wouldn’t be here, reading this newsletter otherwise. For us, the way forward is simple. Continue to read up, test different ideas, and develop foundations. Doing that will allow you to find lots of opportunities and establish an amazing career.

The way I see it, there are 3 ways you can try to educate yourself-

Go at it completely on your own- In my content, I stress the importance of educating yourself. However, there are 20,000 videos on every topic, and knowing what to do next is hard. Finding the correct resources, figuring out an effective plan, and sticking to it alone will be a painful process.
Subscribe to another course or services like AlgoExpert, Leetcode Premium, or your fav book- You could choose to go for the courses/books/boot camps. And I will say it, they’re awesome. They do exactly what they promise. But, too narrow. They will teach you one narrow skill, and end it there. They won’t teach you the foundational knowledge that makes things work. They can’t help you take advantage of contemporary developments. By their very design, they are meant for one time use. This is not good for your long term growth.
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